China files trade case at WTO over Trump’s steel and aluminum tariffs

China has filed a trade case at the World Trade Organization (WTO) over President Trump’s steel and aluminum tariffs.

Beijing has requested dispute consultations over the tariffs — 25 percent on imported steel and 10 percent on aluminum — Trump instituted last month over national security concerns under Section 232 of the Trade Expansion Act of 1962.

China, which has requested 60 days of consultations with the United States, argues that the tariffs are inconsistent with WTO rules and has said that the United States imposed the duties as a safeguard measure that countries use to counter export restrictions by other nations.

{mosads}China’s complaint argues that the United States hasn’t shown that steel and aluminum imports hurt domestic producers and it hasn’t followed the proper procedures in pursuing the tariffs.

Trump has escalated the chances of a trade war with China by vowing to impose tariffs on imports of certain products from China and other countries. 

Separately, Trump has threatened to hit China with tariffs on $50 billion worth of Chinese goods over the lax intellectual property protections and theft of technology by Beijing.

China had already requested consultations under the WTO’s Agreement on Safeguards over the metals tariffs. 

U.S. trade officials called that move “completely baseless” because the Section 232 tariffs address the “national security threat posed by imports of steel and aluminum and are not part of a safeguard action.”

“These actions are not safeguard measures and, therefore, there is no basis to conduct consultations under the Agreement on Safeguards with respect to these measures,” Dennis Shea, the U.S. ambassador to the WTO in Geneva, wrote in a letter to Zhang Xiangchen, his Chinese counterpart, on April 4.

U.S. officials also said that there is no basis under WTO rules for China’s decision to threaten raising tariffs on more than $3 billion in U.S. exports.

WTO rules permit a country like China to retaliate against an action such as the tariffs Trump is planning “if there is a legal finding that the national security rationale is baseless,” said Chad Bown, a senior fellow with the Peterson Institute for International Economics.

The compensation limit has historically been set at the value of an exporting country’s lost trade, Bown said.

Under Trump’s steel and aluminum tariffs China would only incur $689 million in estimated trade losses and could only be authorized that much in retaliation, not the $3 billion China has threatened to impose.

U.S. imports of Chinese steel are relatively low because of nearly 200 previously imposed duties that limit those products.

The trade fight, which is expected to take months to shake out, has roiled stock markets and raised concerns among U.S. businesses and on Capitol Hill over the potentially negative economic effects.